In Formal Opinion 2019-5, the New York City Bar Ethics Committee advised that agreements requiring the client to pay the lawyer’s fees in cryptocurrency amounted to transactions in which the fee is paid in property rather than standard fee agreements.
The Ethics Committee had been asked to opined on the question: Is a fee agreement requiring the client to pay for legal services in cryptocurrency a business transaction governed by Rule 1.8(a)?
The Committee opined that that it was. Accordingly, such fee agreements would be treated as a business transaction with the client subject to the demanding requirements of Rule 1.8(a), in addition to the reasonableness requirement for payment of fees under Rule 1.5(a). The New York opinion concluded that Rule 1.8(a) did not apply if the client had the option but not the obligation to pay the fee in cryptocurrency.
It should ne noted that NY Rule 1.8(a) has some additional requirements in comparison to the Model Rule but the analysis under Rule 1.8(a) would be essentially the same.
DIGEST: A fee agreement requiring a client to pay a lawyer for legal services in cryptocurrency is subject to Rule 1.8(a) of the New York Rules of Professional Conduct (the “Rules”) if the client expects the lawyer to exercise professional judgment on the client’s behalf in negotiating the agreement. If so, the lawyer must comply with the procedural requirements of Rule 1.8(a).
Read full opinion here.
For more information, Nathan M. Crystal